What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-12 compared with 2020-08-12 · 210 added, 141 removed, 245 unchanged (59% of the section changed)

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We are applying these capabilities to develop a robust pipeline in precision medicine oncology, with a research focus in synthetic lethality – which represents an emerging class of precision medicine targets.

Public Offering and Sale of IDEAYA Common Stock

On June 22, 2020, we closed on an underwritten public offering, or the Offering, of 6,666,667 shares of our common stock at an offering price of $15.00 per share, pursuant to which we received gross proceeds of $100.0 million, before deducting underwriting discounts and commissions and other offering expenses.

In addition, as part of the Offering, on July 22, 2020, the Company sold and issued an additional 500,000 shares of common stock upon the exercise of the overallotment option by the underwriters for gross proceeds of $7.5 million before deducting underwriting discounts and commissions and other offering.

Private Placement of IDEAYA Common Stock with GSK

On June 17, 2020, we entered into a stock purchase agreement with Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, pursuant to which GGL agreed to purchase in a private placement, subject to certain conditions, 1,333,333 shares of our common stock at a price per share of $15.00, which is equal to the public offering price per share in the Offering.

The common stock sold pursuant thereto was not registered under the Securities Act of 1933, as amended, or the Securities Act.

The closing of this private placement occurred on August 3, 2020, following HSR Clearance of the associated GSK Collaboration Agreement, described below, and satisfaction of other certain customary closing conditions, pursuant to which we received proceeds of $20.0 million.

Collaboration, Option and License Agreement with GSK

On June 15, 2020, we entered into a Collaboration, Option and License Agreement, or the GSK Collaboration Agreement, with an affiliate of GlaxoSmithKline, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO.

4), Limited, or GSK, pursuant to which we and GSK have entered into a strategic partnership and collaboration for our synthetic lethality programs targeting Methionine adenosyltransferase 2a, or MAT2A, DNA Polymerase Theta, or Pol Theta or POLQ, and Werner Helicase, or WRN.

The GSK Collaboration Agreement became effective on July 27, 2020, or the Effective Date, upon the parties’ receipt of Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance for the GSK Collaboration Agreement.

Pursuant to the GSK Collaboration Agreement, we received from GSK an up-front payment of $100.0 million in cash following the Effective Date.

MAT2A Program

IDE397 – MAT2A Inhibitor Development Candidate

Our lead synthetic lethality research program targets methionine adenosyltransferase 2a, or MAT2A, for solid tumors with MTAP deletions, a patient population estimated to represent approximately 15% of solid tumors.

Our MAT2A inhibitor development candidate is designated as IDE397.

Our preclinical activities continue to support IDE397 as a development candidate and a potential clinical candidate.

We are evaluating the efficacy of monotherapy IDE397 in over forty solid tumor patient derived xenograft, or PDX, models with homozygous MTAP deletions.

Preliminary results show in vivo efficacy in multiple MTAP-null xenograft models demonstrating tumor growth inhibition when MAT2A is pharmacologically inhibited with IDE397 as monotherapy, including in non-small cell lung cancer.

We have completed the in-life phase of our ongoing good laboratory practice, or GLP, compliant toxicology studies with IDE397 in multiple species.

Subject to satisfactory completion of GLP toxicology studies and completion of chemistry, manufacturing and control, or CMC, certification requirements, we are targeting to submit an investigational new drug application, or IND, to the FDA for IDE397 in December 2020.

Subject to effectiveness of the IND, we anticipate initiating a Phase 1 clinical trial for clinical evaluation of IDE397 as monotherapy in the first half of 2021.

Preclinical combination tolerability and efficacy studies are ongoing with IDE397 and GSK3368715, GSK’s Phase 1 Type 1 PRMT inhibitor, including in multiple MTAP-null in vivo efficacy models.

We plan to lead research and development of IDE397 through early clinical development, in collaboration with GlaxoSmithKline pursuant to the Collaboration, Option and License Agreement, or the GSK Collaboration Agreement, with an affiliate of GlaxoSmithKline, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO.

4), Limited, or GSK.

We are advancing our preclinical research for an inhibitor of poly (ADP-ribose) glycohydrolase, or PARG, for patients having tumors with BRCA2 mutations and potentially other genetic and/or molecular signatures.

One of our PARG inhibitor compounds, designated as IDB-PARG, has demonstrated dose-dependent in vivo efficacy as monotherapy with tumor regression or stasis in multiple PDX models.

We are continuing to evaluate the efficacy of IDB-PARG as monotherapy across a panel of additional solid tumor PDX models with specific genetic alterations.

We entered into a strategic collaboration with the Broad Institute of MIT and Harvard focused on synthetic lethality target and biomarker discovery.

Among other objectives, our collaboration with the Broad Institute will evaluate paralog CRISPR knockdown in selected cell lines in conjunction with pharmacological inhibition of PARG to inform patient selection and combination strategies in ovarian and breast cancer.

Subject to further preclinical studies, we are targeting to identify a PARG inhibitor development candidate in 2021.

Werner Helicase

We are also continuing to advance our preclinical research in collaboration with GSK for an inhibitor targeting Werner Helicase, or WRN, for patients having tumors with high microsatellite instability, or MSI.

We have observed dose-dependent cellular viability effect and a dose-dependent cellular pharmacodynamic, or PD, response in multiple endogenous MSI high cell lines.

For this program, we plan to continue further development in collaboration with GSK pursuant to the GSK Collaboration Agreement.

We are progressing our program targeting DNA Polymerase Theta, or Pol Theta or POLQ, in collaboration with GSK for patients having solid tumors with BRCA or other homologous recombination deficiency, or HRD, mutations.

We have shown combination activity with multiple PARP inhibitors, including niraparib.

We have demonstrated synergistic in vivo efficacy of a Pol-theta inhibitor with niraparib:

the combination of our Pol Theta inhibitor with niraparib enhanced the activity of niraparib in the DLD1 BRCA2-/- xenograft model.

Tumor regressions were observed for all animals in the study which were administered the combination.

We plan to continue further development of our POLQ program, including both protein degraders and small molecule inhibitors in collaboration with GSK pursuant to the GSK Collaboration Agreement, and are targeting selecting a development candidate for a Pol Theta small molecule inhibitor in 2021.

DNA Damage Target

We have initiated early preclinical research programs to identify small molecule inhibitors for multiple distinct DNA Damage Targets, or DDTs, for patients with solid tumors characterized by a proprietary biomarker or a gene signature.

Synthetic Lethality Target and Biomarker Discovery Platform

Synthetic lethality continues to be our core research focus.

We have invested significantly and continue to invest in capabilities for identification and validation of new synthetic lethality targets.

For targets of interest, we advance our research to discover therapeutic drugs and relevant biomarkers.

Our synthetic lethality research platform integrates a broad set of computational and functional capabilities.

These capabilities collectively reflect the convergence of advancements in biology, molecular biology, chemistry and information technologies.

For example, molecular biology approaches such as gene knockdown using siRNA, gene editing using CRISPR, quantitative DNA/RNA analysis, protein expression profiling and genomic sequencing can be applied across broad cell lines to create substantial data sets.

Data analytics and computational approaches are used to mine such data sets to identify novel targets and biomarker hypotheses.

These hypotheses are experimentally validated by developing and applying relevant biological assays.

We have established a comprehensive platform to computationally and empirically identify high value synthetic lethal pairs in defined patient populations.

This platform integrates across parallel data sets, each including orthogonal content based on particular screening efforts.

These screens include evaluation of curated, genetically define d and preselected model cell sets indicative of targeted patient populations.

Our platform includes a proprietary library and data set resulting from our DECIPHER™ Dual CRISPR Synthetic Lethality library constructed in collaboration with University of Cal ifornia, San Diego.

The platform will also include data from our recently announced proprietary PAGEO™ , or Paralogous Gene Evaluation in Ovarian cancer, library being developed in collaboration with the Broad Institute utilizing the Sellers laboratory CRI SPR paralog screening platform to evaluate functionally redundant paralogous genes across ovarian cancer subtypes.

Additionally, we are members of the DepMap (Cancer Dependency Map) consortium led by the Broad Institute, through which we have access to a comprehensive data set of genome-wide cell-based screens, including isogenic screens, conducted by the Broad Institute and other contributing institutes, including pre-publication access to new data releases.

As a further component of our synthetic lethali ty platform, we are conducting computational data mining and analysis of relevant public databases, such as The Cancer Genome Atlas, or TCGA, cBioPortal, and Cancer Cell Line Encyclopedia, or CCLE, among others.

Such computational approaches include our p roprietary algorithms which enable us to determine synthetic lethality targets and biomarkers enabling patient stratification.

We have established internal bioinformatics capabilities, which are supplemented by external resources.

We are applying these capabilities and resources to integrate using proprietary algorithms and unsupervised machine learning across each of the orthogonal data sets in our platform.

These integrated, comprehensive analysis efforts allow us to determine synthetic lethality target / biomarker pairs with the strongest signals across the data sets.

Potential therapeutic targets are ranked based on several factors, including the strength of the synthetic lethal interaction, potential drugability, potential clinical development path, and potential market opportunity.

The most promising therapeutic targets are validated empirically.

DECIPHER™ Dual CRISPER Synthetic Lethality Library – UCSD

We have constructed our DECIPHER Dual CRISPR library for synthetic lethality target and biomarker discovery in collaboration with the University of California, San Diego, and bioinformatics analysis and validation are ongoing.

The DECIPHER 1.0 library is focused on DNA Damage Repair targets across various tumor suppressor genes and oncogenes of interest that were selected based on their known prevalence and role in solid tumors, enabling evaluation of approximately 50,000 independent gene knockout combinations of DDR pathway related drug targets across known tumor suppressor genes.

PAGEO™ Paralogous Gene Evaluation in Ovarian Cancer and Dep Map Consortium – Broad Institute

On October 21, 2020, we entered into a strategic collaboration with the Broad Institute of MIT and Harvard focused on synthetic lethality target and biomarker discovery.

This collaboration will use the large-scale CRISPR paralog screening platform developed at the laboratory of William R.

Sellers, M.D., Core Institute Member, Broad Institute, to evaluate functionally redundant paralogous genes across ovarian cancer subtypes and to generate novel target and biomarker hypotheses.

Sellers, who also serves on our Scientific Advisory Board, is the principal investigator for the strategic collaboration.

We have also become a member of the Broad DepMap (Cancer Dependency Map) consortium led by the Broad Institute to further enhance our efforts in bioinformatics and cell-based screening for synthetic lethality target and biomarker discovery and validation.

We are also continuing to invest in our capabilities to advance our research on newly identified synthetic lethality targets of interest, including to enable discovery of therapeutic drugs and relevant biomarkers.

These investments include both additional research personnel and capital investments, which will enhance our capabilities broadly, including in target validation, biological assay development, protein synthesis, structural biology, computational chemistry, and analytical chemistry, among other core functional areas.

Collaboration, Option and License Agreement with GSK for Synthetic Lethality Programs

On June 15, 2020, we entered into the GSK Collaboration Agreement, with GSK, pursuant to which we and GSK have entered into a strategic partnership and collaboration for our synthetic lethality programs targeting MAT2A, Pol Theta and Werner Helicase.

On July 27, 2020, or the Effective Date, the GSK Collaboration Agreement became effective upon t he parties’ receipt of Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance.

We received from GSK an up-front payment of $100.0 million in cash following the Effective Date.

GSK Collaboration – MAT2A Program

For the MAT2A program, we will continue to lead research and development through early clinical development.

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net sales thereafter, with economic adjustments based on the stage of the MAT2A program at the time of opt-out.

GSK Collaboration - Pol Theta Program

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize POLQ products arising out of the POLQ program.

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We believe there are potential synergies to evaluate a combination between our Pol Theta program and GSK’s approved PARP inhibitor, Zejula™, targeting the BRCA and HRD patient population.

Werner Helicase

GSK Collaboration - We rner Helicase Program

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize WRN products arising out of the WRN program.

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net sales thereafter, with economic adjustments based on the stage of the WRN program at the time of opt-out.

GSK Collaboration - General

Under the terms of the GSK Collaboration Agreement, subject to certain exceptions, we and GSK will not, directly or through third parties, develop or commercialize other products whose primary and intended mechanism of action is the modulation of WRN, POLQ, or MAT2A (unless GSK does not exercise the Option or HSR Clearance does not occur with respect thereto, in which case such restriction shall cease to apply with respect to MAT2A) for an agreed upon period of time.

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We may terminate the GSK Collaboration Agreement if GSK or any of its sublicensees or affiliates challenge certain patents of the Company.

GSK may terminate the GSK Collaboration Agreement in its entirety or on a target-by-target basis upon certain notice to us.

GSK may terminate the GSK Collaboration Agreement in its entirety or on a target-by-target basis upon 90-day notice to us.

The GSK Collaboration Agreement contains various representations, warranties, covenants, dispute resolution mechanisms, indemnities and other provisions generally customary for transactions of this nature.

IDE397 – MAT2A Inhibitor D evelopment C andidate

Our lead synthetic lethality research program targets MAT2A for solid tumors with MTAP deletions, a patient population estimated to represent approximately 15% of solid tumors.

In June 2020, we selected a MAT2A inhibitor designated as IDE397 as a development candidate.

Our preclinical activities continue to support IDE397 as a development candidate and potential clinical candidate.

Our preclinical data shows in vivo efficacy in multiple endogenous MTAP-null models demonstrating that MTAP-null tumors are more dependent on the activity of MAT2A, resulting in synthetic lethality when MAT2A is pharmacologically inhibited with IDE397.

For example, we have shown that IDE397 demonstrates in vivo dose-dependent efficacy and tumor regression (with >100% TGI, or tumor growth inhibition) as monotherapy in an endogenous non-small cell lung cancer, or NSCLC, MTAP-null PDX model.

We have initiated good laboratory practice-compliant toxicology studies with our development candidate, IDE397.

Subject to satisfactory completion thereof, we anticipate submitting an investigational new drug application, or IND, to the FDA for our IDE397 development candidate in the fourth quarter of 2020.

Subject to effectiveness of the IND, we anticipate initiating a Phase 1 clinical trial for clinical evaluation of IDE397 in the first half of 2021.We plan to lead research and development through early clinical development of this program, in collaboration with GSK pursuant to the GSK Collaboration Agreement.

We are advancing our preclinical research for an inhibitor of poly (ADP-ribose) glycohydrolase, or PARG, for patients having tumors with BRCA2 mutations, impaired base excision repair, or BER, and potentially other genetic and/or molecular signatures.

We have an ongoing collaboration with Cancer Research UK and University of Manchester evaluating our PARG inhibitors in vitro and in vivo in tumor models having a replication stress genetic signature, which is believed to impart DNA replication vulnerabilities in cancer cells.

We have demonstrated in vivo proof of concept in a relevant animal model having a replication stress genetic signature.

In addition, we are validating a potential synthetic lethality biomarker for identifying tumor cells having sensitivity to a PARG inhibitor, and potentially enabling a patient selection strategy for treatment with a PARG inhibitor.

One of our PARG inhibitor compounds, designated as IDB-PARG, has demonstrated monotherapy in vivo efficacy with tumor regression or stasis in multiple PDX models.

Subject to further preclinical studies, we are targeting to identify a PARG inhibitor development candidate in 2021.

Werner Helicase

We are also continuing to pursue preclinical research in collaboration with GSK for an inhibitor targeting Werner Helicase, or WRN, for patients having tumors with high microsatellite instability, or MSI.

We have observed dose-dependent cellular viability effect and a dose-dependent cellular pharmacodynamic, or PD, response in multiple endogenous MSI high cell lines.

For this program, we plan to continue further development in collaboration with GSK pursuant to the GSK Collaboration Agreement.

We are progressing our Pol-theta program in collaboration with GSK for patients having solid tumors with BRCA or other homologous recombination deficiency, or HRD, mutations.

We have shown combination activity with multiple PARP inhibitors, including niraparib and olaparib.

We have observed synergistic cell viability activity and synergistic in vivo tumor growth inhibition with olaparib in the DLD1 BRCA2 -/- engineered model, with a weak drug-drug interaction signal.

We have demonstrated synergistic in vivo efficacy of a Pol-theta inhibitor with niraparib:

the combination of our Pol-theta inhibitor with niraparib greatly enhanced the activity of niraparib in the DLD1 BRCA2 -/- xenograft model.

Tumor regressions were observed for all animals in the study which were

administered the combination .

All treatments were well-tolerated, with body weights similar to vehicle control at end of study.

We plan to continue further development of our POLQ inhibitors in collaboration with GSK pursuant to the GSK Collaboration Agreement, and are targeting filing of an IND for a Pol Theta inhibitor in 2021.

DNA Damage Target

We have initiated an early preclinical research program to identify a small molecular inhibitor for a DNA Damage Target, or DDT, for patients with solid tumors characterized by a proprietary biomarker or a gene signature.

IDE196 - PKC Inhibitor Clinical Candidate

We continue to execute on our ongoing Phase 1/2 clinical trial and preclinical research activities for our clinical candidate IDE196, a protein kinase C, or PKC, inhibitor for genetically-defined cancers having GNAQ or GNA11 hotspot mutations.

IDE196 - PKC Inhibitor Clinical Candid ate

Our clinical trial strategy is to pursue IDE196 combination therapies in MUM, including with binimetinib, a MEK inhibitor, and independently with crizotinib, a cMET inhibitor, each pursuant to our Clinical Trial Collaboration and Supply Agreement, or Pfizer Agreement, with Pfizer.

We have formed a joint development committee with Pfizer responsible for coordinating all regulatory and other activities under the Pfizer Agreement, including for both the IDE196/binimetinib combination study and IDE196/crizotinib combination study.

If the clinical data from either or both of these combination studies is positive, we plan to enter into good faith negotiations with Pfizer to determine a regulatory submission strategy.

We are continuing to evaluate IDE196 as monotherapy in non-MUM cancers, including in skin melanoma, where we recently announced meeting the clinical protocol criteria for an expansion cohort, based on observing one confirmed partial response in an initial four evaluable patients.

IDE196 / Binimetinib Combination Therapy

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An initial dose escalation portion of this arm of the clinical trial is evaluating the safety and efficacy of IDE196 in combination with binimetinib at various dose combinations, initially in patients with metastatic uveal melanoma, or MUM.

As of August 1, 2020, we have initiated dosing of 3 MUM patients into a first cohort of the dose escalation portion of the combination arm.

Following our evaluation of tolerability and preliminary efficacy from the IDE196 / binimetinib combination arm of the clinical trial in MUM, we may also evaluate IDE196 / binimetinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

The IDE196 / binimetinib combination arm of our Phase 1/2 clinical trial is supported through a clinical trial collaboration and supply agreement with Pfizer Inc., pursuant to which Pfizer supplies us with their MEK inhibitor, binimetinib.

The IDE196 / binimetinib combination arm of our Phase 1/2 clinical trial is supported through the Pfizer Agreement, pursuant to which Pfizer supplies us with their MEK inhibitor, binimetinib.

We have established a joint development committee with Pfizer to facilitate combination arm drug supply, trial initiation and ongoing development.

We anticipate interim data from the IDE196 / binimetinib combination therapy Phase 1/2 portion of the clinical trial in MUM patients in late 2021 or early 2022.

We are continuing patient enrollment into the IDE196 / binimetinib combination arm under the clinical trial collaboration and supply agreement with Pfizer and are targeting combination expansion in the first quarter of 2021.

We anticipate interim data from the IDE196 / binimetinib combination therapy Phase 1/2 portion of the clinical trial in MUM patients in 2021.

IDE196 / Crizotinib Combination Therapy

On September 23, 2020, we expanded the scope of our Pfizer Agreement to evaluate IDE196 and crizotinib as a combination therapy in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

We identified cMET as a potential biomarker and a cMET inhibitor as potential combination agent though our ongoing translational research.

We observed preclinical synergies in cellular models, and a retrospective analysis of human clinical samples from the Novartis Phase 1 clinical trial also independently supported cMET expression / activation as potential biomarker / combo agent.

We are the sponsor of this arm of the clinical trial and are targeting initiation in late 2020 to early 2021 to evaluate the combination of IDE196 and crizotinib.

An initial dose escalation portion of this arm of the clinical trial will be evaluating the safety and efficacy of IDE196 in combination with crizotinib at various dose combinations, initially in patients with metastatic uveal melanoma, or MUM.

Following our evaluation of tolerability and preliminary efficacy from the IDE196 / crizotinib combination arm of the clinical trial in MUM, we may also evaluate IDE196 / crizotinib combination therapy in patients having other solid tumors with activating GNAQ/11 hotspot mutations outside of uveal melanoma, such as skin melanoma.

Pursuant to the Pfizer Agreement, Pfizer will supply us with their cMET inhi bitor, crizotinib.

We have established a joint development committee with Pfizer to facilitate combination arm drug supply, trial initiation and ongoing development.

IDE196 Monotherapy

Our ongoing monotherapy arm of the Phase 1/2 clinical trial was initiated in June 2019 to evaluate IDE196 in solid tumors harboring GNAQ or GNA11 hotspot mutations in a basket trial design.

We have completed enrollment in the monotherapy arm of the Phase 1/2 clinical trialin MUM.

We are continuing to enroll patients having other, non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations, such as skin melanoma.

In the Phase 2 basket arm evaluating IDE196 as monotherapy in solid tumors harboring GNAQ or GNA11 hotspot mutations (GNAQ/11), the clinical protocol criteria have been met for cohort expansion in cutaneous melanoma, or skin melanoma.

As of August 1, 2020, we have enrolled 5 cutaneous melanoma patients harboring GNAQ/11 mutations, toward a target Stage 1 enrollment of 9 patients.

The protocol of this Simon two-stage clinical trial design requires at least one RECIST (Response Evaluation Criteria in Solid Tumors) response in the first Stage 1 cohort (n=9) in order to expand into a second Stage 2 cohort (n=15).

Of 4 evaluable skin melanoma patients harboring GNAQ/11 hotspot mutations (excluding 1 non-evaluable), a 100% Disease Control Rate was observed, and one confirmed partial response (cPR) was determined by RECIST 1.1 guidelines.

Following satisfaction of the clinical protocol criteria, we can enroll an additional 15 skin melanoma patients harboring GNAQ/11 mutations into the Stage 2 cohort expansion.

The skin melanoma patient with cPR observed an initial partial response (-31.1%) at 8 weeks , which was sustained at 20 weeks (-37%) with reduction in target liver lesion and inguinal lymph node.

Treatment with IDE196 is ongoing as of August 1 , 2020.

Prior treatments included multiple immuno-oncology therapies, Nivolumab (Nivo), Ipilimumab, and Pembrolizumab through 2016 and 2017.

Liver metastasis in 2018 was followed by treatment with Nivo in combination with radiation in 2018, and by further treatm ent with T-VEC in 2019.

A subsequent progression was followed by adoptive T-cell therapy in 2019 , with a further confirmed progression noted in February 2020 .

T reatment was subsequently initiated with IDE196 in the monotherapy arm of the clinical trial .

We also enrolled a first leiomyosarcoma patient in the Phase 2 basket arm evaluating IDE196 as monotherapy, expanding the tissue-agnostic approach to additional solid tumors harboring GNAQ or GNA11 hotspot mutations (GNAQ/11).

We are continuing to access potential additional clinical trial sites to supplement enrollment into the Phase 2 basket arm of the IDE196 clinical trial.

We have established a relationship with CARIS through which we are accessing their network of clinical trial sites into which we can enroll qualifying patients having tumors harboring GNAQ/11 hotspot mutations.

The tablet formulation of IDE196 is complete and has been successfully introduced in the ongoing IDE196 clinical trial, including the IDE196 / binimetinib combination arm, and the GNAQ/11 non-MUM basket arm, where in each case we are continuing to enroll new patients.

Based on the increased target enrollment in the skin melanoma cohort of our GNAQ/11 basket arm and the potential impact of the COVID-19 pandemic, we are planning to disclose interim data from the monotherapy arm of our ongoing IDE196-001 Phase 1/2 basket trial in the first half of 2021.

We have completed enrollment in the monotherapy arm of the Phase 1/2 clinical trial in MUM.

We are also enrolling other, non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations, such as skin melanoma.

In the Phase 2 basket arm evaluating IDE196 as monotherapy in non-MUM solid tumors harboring GNAQ or GNA11 hotspot mutations (GNAQ/11), the clinical protocol criteria have been met for cohort expansion in cutaneous melanoma, or skin melanoma.

We are actively enrolling for this Phase 2 cohort expansion in skin melanoma.

Of 4 evaluable skin melanoma patients harboring GNAQ/11 hotspot mutations (excluding 1 non-evaluable) as of August 1, 2020, a 100% Disease Control Rate was observed, and one confirmed partial response (cPR) was determined by RESIST, or Response Evaluation Criteria in Solid Tumors, 1.1 guidelines, satisfying the protocol requirement of at least one RECIST response in the first Stage 1 cohort (n=9) in order to expand into a second Stage 2 cohort (n=15).

Following satisfaction of the clinical protocol criteria, we can enroll an additional 15 skin melanoma patients harboring GNAQ/11 mutations into the Stage 2 cohort expansion, for a total planned enrollment of 24 patients in the skin melanoma cohort.

As of November 1, 2020, we have enrolled a total of seven patients with solid tumors other than MUM, including six patients with skin melanoma, into the Phase 2 monotherapy basket arm.

We have added and are continuing to access potential additional clinical trial sites to supplement enrollment into the Phase 2 basket arm of the IDE196 clinical trial.

We have established a relationship with Tempus and with CARIS, in each case through which we are accessing their network of clinical trial sites into which we can enroll qualifying patients having tumors harboring GNAQ/11 hotspot mutations.

We anticipate disclosing interim data from the monotherapy arm of our ongoing IDE196-001 Phase 1/2 basket trial in 2021.

IDE196 was initially developed by Novartis, and we obtained an exclusive, worldwide license to IDE196 from Novartis in September 2018.

Pursuant to our license agreement with Novartis, except for Novartis’ ongoing Phase 1 clinical trial, we control all future clinical development, and all commercial rights to IDE196, and may rely on and incorporate data previously submitted to th e FDA by Novartis into our own regulatory submissions.

Pursuant to our license agreement with Novartis, except for Novartis’ ongoing Phase 1 clinical trial, we control all future clinical development, and all commercial rights to IDE196, and may rely on and incorporate data previously submitted to the FDA by Novartis into our own regulatory submissions.

Novartis has completed enrollment in a Phase 1 clinical trial it is conducting to evaluate IDE196 in metastatic uveal melanoma.

Phase 1 monotherapy data from Novartis was presented at the American Association for Cancer Research, or AACR, in April 2019.

A confirmed Complete Response at the 200 mg BID dose level was observed at month 31 in one of four patients previously reported with confirmed partial response out of 30 total (28 evaluable) BID patients in the monotherapy arm of the Novartis clinical trial.

As of May 14, 2020, this patient with a confirmed Complete Response in the monotherapy arm of this clinical trial remains on treatment with IDE196.

Regulatory / Potentially Registration-Enabling Clinical Trial

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We initiated 13-week good laboratory practice-, or GLP-, compliant toxicology studies in two species in November 2019, in support of an FDA requirement that results of these studies be submitted prior to enrollment of more than approximately 50 patients in the potentially registrational arm that will support a marketing application.

As of August 1, 2020, we have completed the 13-week preclinical toxicology studies of IDE196 in two species, following our receipt of submission-ready audited draft reports.

We will evaluate clinical tolerability and efficacy data from each of the ongoing IDE196 monotherapy Phase 1 portion of the clinical trial in MUM patients and the IDE196 / binimetinib combination therapy Phase 1/2 portion of the clinical trial in MUM patients in late 2021 early 2022, as well as potential strategic partnering of the IDE196 program, prior to initiation of a potentially registrational clinical trial in MUM.

We will provide updated guidance

on timing for a potential NDA submission for IDE196 i n MUM after making such decision on a potential registrational pathway in MUM.

Preclinical Evaluation of IDE196 with Other Combination Agents / Other Potential Patient Populations or Other Potential Indications

We are continuing our preclinical evaluation of IDE196 in combination with various other potential combination agents, including for potential clinical relevance in metastatic uveal melanoma or other solid tumors harboring GNAQ or GNA11 hotspot mutations.

We have completed the 13-week preclinical toxicology studies of IDE196 in two species.

We plan to evaluate clinical tolerability and efficacy data from each of th e ongoing IDE196 monotherapy Phase 1 portion of the clinical trial in MUM patients and the IDE196 combination therapy Phase 1/2 portions of the clinical trial in MUM patients, as well as potential strategic partnering of the IDE196 program, prior to initia tion of a potentially registrational clinical trial in MUM.

We will provide updated guidance on timing for a potential NDA submission for IDE196 in MUM after making such decision on a potential registrational pathway in MUM.

Other Potential Indications

We are continuing our preclinical evaluation of IDE196 in Sturge-Weber Syndrome, or SWS, a rare neurocutaneous disorder characterized by capillary malformations and associated with mutations in GNAQ.

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The specific impact on enrollment into the Phase 2 expansion of the monotherapy arm for non-MUM solid tumors having GNAQ or GNA11 hotspot mutations is currently uncertain.

Enrollment into the combination arm evaluating IDE196 and binimetinib as combination therapy in MUM and non-MUM solid tumors having GNAQ or GNA11 hotspot mutations may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, by clinical site-specific policies and practices related to COVID-19.

Enrollment into the combination arm evaluating IDE196 and binimetinib and/or the combination arm of IDE196 and crizotinib, in each case as combination therapy in MUM and non-MUM solid tumors having GNAQ or GNA11 hotspot mutations, may be delayed by circumstances resulting from the COVID-19 pandemic, including for example, by clinical site-specific policies and practices related to COVID-19.

The specific impact on enrollment into this combination arm of the Phase 1/2 clinical trial is currently uncertain.

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To date, the COVID-19 pandemic has not materially affected our supply chain or development schedule, but further escalation of the health crisis has the potential to cause delays in our supply chain and manufacturing operations, which could materially adversely impact our business.

Clinical Trial Collaboration and Supply Agreement for IDE196 Program

On March 11, 2020, we entered into the Pfizer Agreement with Pfizer Inc., pursuant to which Pfizer will supply us with their MEK inhibitor, binimetinib, to evaluate the combination in patients with tumors harboring activating GNAQ or GNA11 hotspot mutations.

On September 23, 2020, we expanded the scope of our clinical trial collaboration and supply agreement with Pfizer, pursuant to which Pfizer will supply us with their cMET inhibitor, crizotinib to evaluate IDE196 and crizotinib as a combination therapy in patients having tumors harboring activating GNAQ or GNA11 hotspot mutations.

For each of the IDE196/binimetinib and IDE196/crizotinib combination arms of the clinical trial, we have established a joint development committee, and there will be joint decision ma king and data sharing of the clinical trial results between the parties.

We will sponsor the clinical studies and Pfizer will provide the binimetinib and crizotinib drug supply.

If there is clinical data from the collaboration studies that could be used to obtain regulatory approvals or label changes, we will enter into good faith negotiations with Pfizer to determine a regulatory submission strategy.

Public Offering and Sale of IDEAYA Common Stock

On July 22, 2020, as part of the Offering, the Company sold and issued an additional 500,000 shares of common stock upon the exercise of the overallotment option by the underwriters for gross proceeds of $7.5 million before deducting underwriting discounts and commissions and other offering.

We realized aggregate gross proceeds of $107.5 million from the Offering, including gross proceeds from the sale of shares in the base Offering and the sale of shares from exercise of the overallotment option, and before deducting underwriting discounts and commissions and other offering expenses payable by us.

Private Placement of IDEAYA Common Stock with GSK

The common stock sold pursuant thereto was not registered under the Securities Act of 1933, as amended, or the Securities Act.

On August 3, 2020, following HSR Clearance of the associated GSK Collaboration Agreement, we closed on the private placement of 1,333,333 shares of our common stock to Glaxo Group Limited, or GGL, an affiliate of GlaxoSmithKline, at a price per share of $15.00, which is equal to the public offering price per share in the Offering.

The common stock sold pursuant thereto was not registered under the Securities Act of 1933, as amended, or the Securities Act.

We received proceeds of $20.0 million from the sale of these shares in this private placement.

Prospectus Supplement - At-the-Market Facility

On August 12, 2020, we filed a prospectus supplement to the prospectus dated June 10, 2020, activating our at-the-market, or ATM, facility by entering into a sales agreement with Jefferies LLC, or Jefferies, relating to shares of our common stock offered by the prospectus supplement and the accompanying prospectus.

Pursuant to the terms of the sales agreement, we may offer and sell shares of our common stock, $0.0001 par value per share, having an aggregate offering price of up to $50,000,000 from time to time through Jefferies acting as agent.

During the three months ended September 30, 2020, we did not make any sales under the ATM facility.

Corporate Update

We do not have any products approved for sale and have not generated any revenue since inception.

We have funded our operations through June 30, 2020 primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes.

We have funded our operations through September 30, 2020 primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes.

In May 2019, we completed our initial public offering, or IPO.

In June and July 2020, we added an aggregate of $227.5 million to our balance sheet from a follow-on public offering of $107.5 million in gross proceeds, a direct private placement equity investment by GSK with $20.0 million in gross proceeds, and a non-dilutive upfront cash payment of $100 million from GSK.

In June and July 2020, we added an aggregate of $227.5 million to our balance sheet from a follow-on public offering of $107.5 million in gross proceeds, a direct private placement equity investment by GGL with $20.0 million in gross proceeds, and a non-dilutive upfront cash payment of $100 million from GSK.

Since our inception in June 2015, we have devoted substantially all of our resources to discovering and developing our product candidates.

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seek regulatory approval, and prepare for, and, if approved, proceed to commercialization;

acquire, discover, validate and

develop additional product candidates;

acquire, discover, validate and develop additional product candidates;

obtain, maintain, protect and enforce our intellectual property portfolio;

and hire additional personnel.

Certain program costs that contribute to our operating expen ses will be reimbursed by GSK pursuant to the GSK Collaboration Agreement , including 100% of costs we incur for research we perform in connection with the Pol T heta program and 80% of the aggregate program costs incurred by us and GSK for research each of us performs for the MAT2A program, if GSK exercises the Option, and the Werner H elicase program .

In addition, we expect to incur additional costs associated wit h operating as a public company.

Our net losses were $24.4 million and $20.2 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

As of June 30, 2020, we had an accumulated deficit of $116.9 million.

Certain program costs that contribute to our operating e xpenses will be reimbursed by GSK pursuant to the GSK Collaboration Agreement , including 100% of costs we incur for research we perform in connection with the Pol T heta program and 80% of the aggregate program costs incurred by us and GSK for research each of us performs for the Werner Helicase program, and if GSK exercises the Option, also the MAT2A program .

In addition, we expect to incur additional costs associated with operating as a public company.

Our net losses were $29.4 million and $31.2 million for the nine months ended September 30, 2020 and September 30, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $121.9 million.

Our ability to generate product revenue will depend on the successful development, regulatory approval and eventual commercialization of one or more of our product candidates, ourselves, or for some programs, in collaboration with our strategic partners.

We are leading and solely responsible for preclinical, translational and clinical research and development, as applicable, for (i) the IDE196 monotherapy arm of our IDE196-001 clinical trial, (ii) our PARG program and (iii) our DNA Damage Target or DDT program.

We are leading clinical development in the ongoing IDE196 / binimetinib combination arm of our IDE196-001 clinical trial, in coordination with Pfizer pursuant to the Clinical Trial Collaboration and Supply Agreement.

We are leading clinical development in the ongoing IDE196 / binimetinib combination arm and the planned IDE196/crizotinib combination arm of our IDE196-001 clinical trial, in each case in coordination with Pfizer pursuant to the Clinical Trial Collaboration and Supply Agreement.

We are leading preclinical development and plan to lead early-stage clinical development for evaluation of IDE397 in a clinical trial which we plan to initiate in the first half of 2020, in coordination with GSK pursuant to the GSK Collaboration Agreement.

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If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our product candidates.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $172.0 million.

We supplemented our quarter-end balance sheet of $172.0 million with an additional $127.5 million aggregate gross proceeds received subsequent to quarter end, including $100.0 million non-dilutive upfront cash payment from GSK, $20.0 million proceeds from the direct private placement equity investment by GSK, and $7.5M gross proceeds from the overallotment option exercise of the Offering.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $288.8 million.

We believe that our cash, cash equivalents and marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements.

These funds will support our efforts through potential achievement of multiple preclinical and clinical milestones across multiple programs.

Anticipated clinical milestones in our synthetic lethality pipeline include Phase 1 monotherapy interim data for IDE397, our MAT2A inhibitor development candidate, Phase 1 monotherapy interim data for our Pol theta inhibitor development candidate, which we are targeting to designate in 2021, and Phase 1 initiation for our PARG inhibitor development candidate, which we are targeting to select in 2021.

Anticipated clinical milestones for our IDE196 Phase 1/2 clinical trial include initiation of a Phase 1 dose escalation arm of our clinical trial for evaluating IDE196 and crizotinib as combination therapy in the first half of 2021, expansion of IDE196 / binimetinib combination arm of clinical trial, interim data for IDE196 monotherapy in MUM and other GNAQ/11 solid tumors, as well as interim data for IDE196 and binimetinib as combination therapy in 2021.

Components of Operating Results

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To date, we have not generated any revenue from product sales, and we do not expect to generate any revenue from product sales for the foreseeable future.

To date, we have not generated any collaboration revenue, and we expect to start generating collaboration revenue in the third quarter of 2020.

Our revenue will primarily consist of collaboration revenue under the GSK Collaboration Agreement, including amounts that are recognized related to upfront payments, milestone payments, option exercise payments, and amounts due to us for research and development services.

Our revenue primarily consists of collaboration revenue under the GSK Collaboration Agreement, including amounts that are recognized related to upfront payments and amounts due to us for research and development services.

In the future, revenue may include additional milestone payments, option exercise payments, profit sharing, and royalties on any net product sales under our collaborations.

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Substantially all of our research and development expenses consist of expenses incurred in connection with discovery and development of our product candidates.

costs, costs for laboratory supplies, costs for product licenses and allocated overhead, including rent, equipment , depreciation, information technology costs and utilities.

These expenses include certain payroll and personnel-related expenses, including salaries, employee benefit costs and stock-based compensation expenses for our research and product development employees, fees to third parties to conduct certain research and development activities on our behalf including fees to CMOs and CROs in support of manufacturing and clinical activity for IDE 196, consulting costs, costs for laboratory supplies, costs for product licenses and allocated overhead, including rent, equipment, depreciation, information technology costs and utilities.

We expense both internal and external research and development expenses as they are incurred.

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The capitalized amounts are recognized as expense as the goods are delivered or the related services are performed.

We do not allocate our costs by product candidate, as a significant amount of research and development expenses include internal costs, such as payroll and other personnel expenses, laboratory supplies and allocated overhead, and external costs, such as fees to third parties to conduct research and development activities on our behalf, none of which are tracked by product candidate.

In particular, with respect to internal costs, several of our departments support multiple product candidate research and development programs, and therefore the costs cannot be allocated to a particular product candidate or development program.

We are focusing substantially all of our resources on the development of our product candidates.

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Results of Operations

Comparison of Three Months Ended June 30, 2020 and 2019

Comparison of Three Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the periods indicated (in thousands):

Three Months Ended

September 30,

Collaboration revenue

Operating expenses:

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Interest income and other income (expense), net

Collaboration Revenue

Collaboration revenue increased by $9.0 million in the three months ended September 30, 2020.

In July 2020, the GSK Collaboration Agreement became effective, and we started recognizing collaboration revenue, which consists of revenue from preclinical and Phase 1 monotherapy clinical research and development services under the MAT2A program as well as preclinical research services and the related license under the Pol Theta and WRN programs.

Collaboration revenue recognized in the three months ended September 30, 2020 also included revenue from the exercise by GSK of the material right associated with the option to license IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities.

Research and Development Expenses

Research and development expenses decreased by $0.3 million, or 3%, from the three months ended June 30, 2019 to the three months ended June 30, 2020.

The decrease in research and development expenses was due to a decrease in payroll expenses, including salaries and benefits, of $0.8 million, and a decrease in costs for laboratory supplies used in support of our research programs of $0.6 million, which was partially offset by an increase in fees to CROs of $0.7 million as well as fees to contractors of $0.4 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors and the advancement of our lead product candidates through preclinical studies.

Research and development expenses increased by $1.1 million, or 12%, from the three months ended September 30, 2019 to the three months ended September 30, 2020.

The increase in research and development expenses was primarily due to an increase in fees to CROs of $1.2 million as well as fees to contractors of $0.5 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors, the advancement of our lead product candidates through preclinical studies and regulatory support activity, which was partially offset by a decrease in costs for laboratory supplies used in support of our research programs of $0.4 million and a decrease in payroll expenses, including salaries, benefits and stock-based compensation expense, of $0.2 million.

General and Administrative Expenses

General and administrative expenses increased by $1.6 million, or 68%, from the three months ended June 30, 2019 to the three months ended June 30, 2020.

The increase in general and administrative expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $0.6 million related to increased headcount to support our growth as a public company, an increase in director and officer, or D&O, insurance policy premiums of $0.3 million as a public company, an increase in costs associated with the filing of a shelf registration statement on Form S-3 of $0.3 million, and an increase in legal expense of $0.3 million related to an increase in patent filings and work related to the GSK Collaboration Agreement.

General and administrative expenses increased by $1.2 million, or 46%, from the three months ended September 30, 2019 to the three months ended September 30, 2020.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $0.4 million, or 66%, from the three months ended June 30, 2019 to the three months ended June 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

Comparison of Six Months Ended June 30, 2020 and 2019

Interest income and other income (expense), net decreased by $0.6 million, or 89%, from the three months ended September 30, 2019 to the three months ended September 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Comparison of Nine months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Collaboration revenue

Operating expenses:

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Loss from operations

Interest income

Interest income and other income (expense), net

Collaboration Revenue

Collaboration revenue increased by $9.0 million in the nine months ended September 30, 2020.

Collaboration revenue recognized in the nine months ended September 30, 2020 also included revenue from the exercise by GSK of the material right associated with the option to license IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities.

Research and Development Expenses

Research and development expenses increased by $0.8 million, or 5%, from the six months ended June 30, 2019 to the six months ended June 30, 2020.

The increase in research and development expenses was primarily due to an increase in fees to CROs $2.1 million as well as fees to contractors of $0.7 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors and the advancement of our lead product candidates through preclinical studies, which was partially offset by a decrease in payroll expenses, including salaries and benefits, of $1.3 million, and a decrease in costs for laboratory supplies used in support of our research programs of $1.0 million.

Research and development expenses increased by $1.9 million, or 7%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020.

The increase in research and development expenses was primarily due to an increase in fees to CROs of $3.3 million as well as fees to contractors of $1.1 million related to support costs for our Phase 1/2 clinical trial to evaluate IDE196 in solid tumors and the advancement of our lead product candidates through preclinical studies, which was partially offset by a decrease in payroll expenses, including salaries, benefits and stock-based compensation expense, of $1.4 million, and a decrease in costs for laboratory supplies used in support of our research programs of $1.4 million.

General and Administrative Expenses

General and administrative expenses increased by $3.0 million, or 66%, from the six months ended June 30, 2019 to the six months ended June 30, 2020.

The increase in general and administrative expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $1.3 million related to increased headcount to support our growth as a public company, an increase in D&O insurance policy premiums of $0.8 million as a public company, an increase in costs associated with the filing of a shelf registration statement on Form S-3 of $0.3 million, and an increase in legal expense of $0.3 million related to an increase in patent filings and work related to the GSK Collaboration Agreement.

General and administrative expenses increased by $4.2 million, or 59%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020.

The increase in general and administrative expenses was primarily due to an increase in payroll expenses, including salaries, benefits and stock-based compensation expense, of $2.3 million related to increased headcount to support our growth as a public company, an increase in D&O insurance policy premiums of $0.9 million as a public company, an increase in legal expense of $0.3 million related to an increase in patent filings, an increase in costs associated with the filing of a shelf registration statement on Form S-3 of $0.2 million, and an increase in consulting expenses of $0.2 million related to human resources and information technology projects.

Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net decreased by $0.5 million, or 43%, from the six months ended June 30, 2019 to the six months ended June 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Interest income and other income (expense), net decreased by $1.1 million, or 60%, from the nine months ended September 30, 2019 to the nine months ended September 30, 2020, primarily due to a decrease in interest rate yields on our cash, cash equivalents and marketable securities balances during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019.

Liquidity and Capital Resources ;

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Sources of Liquidity

We have funded our operations primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes.

In May 2019, we completed our IPO.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $172.0 million, consisting primarily of money market funds, U.S.

We have funded our operations primarily through the sale and issuance of common stock, redeemable convertible preferred stock, and convertible promissory notes, as well as the up-front payment received from GSK.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $288.8 million, consisting primarily of money market funds, U.S.

government securities, commercial paper, and corporate bonds.

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We have incurred net losses since our inception.

For the six months ended June 30, 2020 and June 30, 2019, we had net losses of $24.4 million and $20.2 million, respectively, and we expect to incur substantial additional losses in future periods.

As of June 30, 2020, we had an accumulated deficit of $116.9 million.

For the nine months ended September 30, 2020 and September 30, 2019, we had net losses of $29.4 million and $31.2 million, respectively, and we expect to incur substantial additional losses in future periods.

As of September 30, 2020, we had an accumulated deficit of $121.9 million.

Based on our current business plan, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements.

To date, we have not generated any revenue.

We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates or enter into collaborative agreements with third parties, and we do not know when, or if, either will occur.

We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we continue the development of,

and seek regulatory approvals for, our product candidates and begin to commercialize any approved products.

We are subject to all of the risks typically related to the development of new product candidates, and we may encounter u nforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

To date, we have not generated any product revenue.

We do not expect to generate any meaningful product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if, it will occur.

We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates and begin to commercialize any approved products.

We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

Moreover, we expect to incur additional costs associated with operating as a public company.

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The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for each of the periods presented below (in thousands):

Six Months Ended

Net cash (used in) provided by:

Nine Months Ended

September 30,

Net cash provided by (used in):

Operating activities

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Cash Flows from Operating Activities

Net cash used in operating activities was $23.2 million for the six months ended June 30, 2020.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $24.4 million, adjusted for an increase in prepaid expenses and other assets of $0.8 million mainly due to advance payment for our D&O insurance policy premiums, and a decrease in lease liabilities of $0.6 million due to lease amortization, partially offset by stock-based compensation expense of $1.6 million, depreciation and amortization expense of $0.7 million and a decrease in right-of-use assets of $0.5 million due to lease amortization.

Net cash used in operating activities was $20.1 million for the six months ended June 30, 2019.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $20.2 million, adjusted for an increase in prepaid expenses and other assets of $1.7 million mainly due to advance payment for D&O insurance policy premiums and net amortization of premiums and discounts on marketable securities of $0.4 million, partially offset by stock-based compensation expense of $0.9 million, an increase in accrued and other liabilities of $0.9 million mainly due to fees to our CROs and CMOs and depreciation and amortization expense of $0.6 million.

Net cash provided operating activities was $67.1 million for the nine months ended September 30, 2020.

Cash provided by operating activities was primarily due to an increase in contract liability of $91.0 million as a result of the up-front payment received from GSK, stock-based compensation expense of $2.6 million, an increase of accrued and other liabilities of $1.2 million due to fees to CROs and CMOs in support of research and manufacturing activities and an increase in accrued payroll expenses due to increased headcounts, depreciation and amortization expense of $1.0 million and an increase in accounts payable of $0.7 million due to fees to CROs and CMOs in support of research and manufacturing activities, partially offset by the use of funds in our operations to develop our product candidates resulting in a net loss of $29.4 million.

Net cash used in operating activities was $30.6 million for the nine months ended September 30, 2019.

Cash used in operating activities was primarily due to the use of funds in our operations to develop our product candidates resulting in a net loss of $31.2 million, adjusted for the net amortization of premiums and discounts on marketable securities of $0.5 million and an increase in prepaid expenses and other assets of $2.1 million mainly due to advance payment for director’s and officers’ liability insurance premiums and CRO fees, partially offset by depreciation and amortization expense of $0.9 million and stock-based compensation expense of $1.4 million, and an increase in accrued and other liabilities of $1.0 million mainly due to fees to CMOs in support of manufacturing activity for IDE196 and for external research and personnel-related expenses.

Cash Flows from Investing Activities

Net cash provided by investing activities was $41.9 million for the six months ended June 30, 2020, which consisted of $68.2 million provided by maturities of marketable securities, partially offset by $26.2 million used to purchase marketable securities and $0.1 million used to purchase property and equipment..

Net cash provided by investing activities was $36.8 million for the six months ended June 30, 2019, which consisted of $18.1 million provided by maturities of marketable securities and $58.2 million from sales of marketable securities, partially offset by $38.4 million used to purchase marketable securities and $1.1 million used to purchase property and equipment.

Net cash used in investing activities was $141.7 million for the nine months ended September 30, 2020, which consisted of $214.4 million used to purchase marketable securities and $0.3 million used to purchase property and equipment, partially offset by $73.0 million provided by maturities of marketable securities.

Net cash used in investing activities was $1.6 million for the nine months ended September 30, 2019, which consisted of $86.1 million used to purchase marketable securities and $1.1 million used to purchase property and equipment, offset by $67.5 million provided by maturities of marketable securities and $18.1 million from sales of marketable securities.

Cash Flows from Financing Activities

Net cash provided by financing activities was $94.7 million for the six months ended June 30, 2020, which consisted of $93.9 million of net proceeds from our follow-on offering, $0.7 million of proceeds from exercise of common stock options, and $0.1 million of proceeds from ESPP purchase.

Net cash used in financing activities was $50.8 million for the six months ended June 30, 2019, which consisted primarily of $50.8 million of net proceeds from our IPO.

Net cash provided by financing activities was $121.8 million for the nine months ended September 30, 2020, which consisted of $100.7 million of net proceeds from our follow-on offering, $20.0 million of net proceeds from our private placement of common stock, $1.0 million of proceeds from exercise of common stock options, and $0.1 million of proceeds from ESPP purchase.

Net cash provided by financing activities was $50.6 million for the nine months ended September 30, 2019, which consisted primarily of $50.2 million of net proceeds from our IPO.

Contractual Obligations and Commitments

The disclosure of our contractual obligations and commitments is set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K filed with the SEC on March 24, 2020.

There have been no material changes in our contractual obligations and commitments since December 31, 2019.

We lease our laboratory and office facilities in South San Francisco, California under a non-cancelable operating lease with an expiration date in July 2024, dated August 26, 2016 and amended in May 2018.

In September 2019, we further amended our South San Francisco facility lease agreement to expand the size of the premises by adding 5,588 rentable square feet of additional space, which we took possession of in August 2020 (“Second Expansion”).

The Second Expansion increased our operating lease obligations by $1.2 million as of September 30, 2019.

Other than the increase in our operating lease obligations due to the Second Expansion, there have been no material changes in our contractual obligations and commitments since December 31, 2019.

Off-Balance Sheet Arrangements

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Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K filed with the SEC on March 24, 2020, and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

During the six months ended June 30, 2020, except as described in Note 2 to the unaudited interim condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K filed with the SEC on March 24, 2020.

During the nine months ended September 30, 2020, except as described in Note 2 to the unaudited interim condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K filed with the SEC on March 24, 2020.

Revenue Recognition

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Licenses of intellectual property:

If a license to our intellectual p roperty is determined to be distinct from the other promised goods or services identified in an arrangement, we recognize revenue from non-refundable, upfront fees allocated to the license at the point in time when the license is transferred to the custome r and the customer is able to use and benefit from the license.

For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is s atisfied over time or at a point in time and, if over time, the appropriate method of measuring progress toward satisfying the performance obligation for purposes of recognizing revenue from non-refundable, upfront fees.

If a license to our intellectual property is determined to be distinct from the other promised goods or services identified in an arrangement, we recognize revenue from non-refundable, upfront fees allocated to the license at the point in time when the license is transferred to the customer and the customer is able to use and benefit from the license.

For licenses that are bundled with other goods or services, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress toward satisfying the performance obligation for purposes of recognizing revenue from non-refundable, upfront fees.

We evaluate the measure of progress each reporting period and, if necessary, adjusts the measure of progress and related revenue recognition.

Customer options for additional goods or services:

If a contract contains customer options that allow the customer to acquire additional goods or services, including a license to our intellectual property, the goods and services underlying the customer options are evaluated to determine whether they are deemed to represent a material right.

In determining whether the customer op tion has a material right, we assess whether there is an option to acquire additional goods or services at a discount.

If the customer option is determined not to represent a material right, the option is not considered to be a performance obligation.

If t he customer option is determined to represent a material right, the material right is recognized as a separate performance obligation.

We allocate the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized as revenue until the option is exercised.

Milestone payments:

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however, it is not necessary for us to use the same approach for all contracts.

We expect to use the most likely amount method for development and regulatory milestone payments.

If it is probable that a significant revenue reversal would not occur when the uncertainty associated with the milestone is resolved, the associated milestone value is included in the transaction price.

Milestone payments that are highly susceptible to factors outside the Company’s influence, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

Milestone payments that are highly susceptible to factors outside our influence, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

If there is more than one performance obligation, the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis.

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We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

Contractual cost sharing payments received from a customer or collaboration partner are accounted for as variable consideration.

We include an expected value in the transaction price.

Contractual cost sharing payments received from a customer or collaboration partner are accounted for as variable consideration.

We include an expected value in the transaction price.

Contractual cost sharing payments made to a customer or collaboration partner are accounted for as a reduction to the transaction price if such payments are not related to distinct goods or services received from the customer or collaboration partner.

Contracts may be amended t o account for changes in contract specifications and requirements.

Contracts may be amended to account for changes in contract specifications and requirements.

Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations.

When contract modifications create new performance obligations a nd the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations as adjusted for specific facts and circumstances of the contract, the modification is accounted for as a separate contract.

If a contract modification is not accounted for as a separate contract, we account for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification.

We account for a contract modificatio n as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification.

In such case the effect t hat the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) a t the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).

When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations as adjusted for specific facts and circumstances of the contract, the modification is ac counted for as a separate contract.

If a contract modification is not accounted for as a separate contract, we account for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if t he remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification.

We account for a contract modification as if it were a part of the existing contract if the remaining goods or services a re not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification.

In such case the effect that the contract modification has on the transaction price, and on the entity’s meas ure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumu lative catch-up basis).

Upfront payment contract liabilities resulting from our license and collaboration agreements do not represent a financing component as the payment is not financing the transfer of goods and services, and the technology underlying the licenses granted reflects research and development expenses already incurred by us.

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The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates or exchange rates.

As of June 30, 2020, we had cash equivalents and marketable securities of $171.9 million, consisting of interest-bearing money market funds, investments in U.S.

As of September 30, 2020, we had cash equivalents and marketable securities of $288.7 million, consisting of interest-bearing money market funds, investments in U.S.

government securities, commercial paper, and corporate bonds, for which the fair value would be affected by changes in the general level of U.S.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis